Inflation held steady at 2.6% in Fed’s preferred gauge

Inflation held steady at a 2.6% annual rate in December, as measured by the gauge favored by the Federal Reserve.

The new personal consumption expenditures price index numbers reported Friday morning by the Bureau of Economic Analysis don’t show prices falling last month, and so may be a bit of a disappointment for the Fed, which is working to lower inflation by keeping interest rates elevated.

Still, there are some bright spots. Core PCE inflation, a measure of inflation that strips out volatile energy and food prices, fell 0.3 percentage points to a 2.9% year-over-year rate. That is slightly better than what economists were expecting

Despite price growth declining over the past year, overall inflation is still running above the Fed’s goal of 2% annual price growth.

On a monthly basis, prices rose 0.2 percentage points in December. Prices had declined slightly in November.

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